Apple iPhone may still come at a discount on e-commerce sites

Apple India officials have said that the company will just set the maximum retail price, thereafter, distributors, online sellers or offline stores are free to sell at any price.Writankar Mukherjee | ET Bureau | August 29, 2017, 06:57 IST

KOLKATA: Apple’s iPhones will continue to sell at discounted rates on e-commerce sites, bucking the latest smart-phone industry trend of uniform pricing across online platforms and brick-and-mortar stores after the introduction of the single producer levy in the country.

Three top industry executives dealing with Apple told ET that senior officials at the iconic phone-maker and its distributors have informed them that online discounting will remain a pivotal strategy for Apple in India since it leads to an instant surge in sales and clears stuck inventory. Apple will be part of all online discounting promotions.

An email sent to Apple India did not elicit any response until the publication of this report. “Apple distributors were, until recently, giving us indications that iPhone prices will be the same across sales channels after the GST, with an end to the discounting that was attributable to sourcing from low-tax markets. But they have now clarified that online discounting will continue,” said a senior executive with a leading hand-phone retailer.

According to industry sources, Apple India officials have said that the company will just set the maximum retail price, thereafter, distributors, online sellers or offline stores are free to sell at any price.

“The discounts are now funded by the distributor and sellers, with some occasional support from Apple. Such support from Apple is for both online marketplaces and also for the exclusive Apple Premium Resellers,” one of them said.

The offline retailers were taken aback when they saw Rs 5,000-6,000 discount on iPhone models during the recently concluded Independence Day sales at Amazon and Flipkart. Even the Apple Premium Resellers have off-late started special price promotions during weekends to drive sales.

At present, Amazon is running an “Apple Fest” offering discount as well as cash-back and exchange offers. An iPhone SE 32GB model is getting sold at Rs 18,999 as compared to the usual price of Rs 22,999. Similarly, iPhone 7 32GB model is selling at Rs 44,999 as compared to Rs 47,499.

“Apple products are hot favourites with e-commerce marketplaces since they have a brandpull, and yield higher gross merchandise value due to higher prices. Even the Apple Premium Resellers get around 10% retail margin as compared to the usual 4-5% and hence they have the bandwidth to discount the products,” said one of the executives.

Industry executives said discounts on iPhones are likely to increase from September onward as Apple would want to clear out as much inventory before launching the newer iPhone models expected before Diwali.

“Discounting will be restricted largely to the old models, and Apple will ensure strict control of discounting on the new iPhone models. As a precursor to the launch of new models, Apple has just organised its distribution structure,” one of the executives mentioned above said.

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